• by Joe Mandese , October 3, 2013

...It has become even more opaque. That’s the message the team at data-driven marketing analytics firm Ebiquity put out this week on the eve the Association of National Advertisers annual conference, which begins today in Phoenix. In an opinion piece written by Nick Manning, president-international at Ebiquity, he asserts that the acceleration of real-time trading isn’t creating the kind of market transparency many of its supporters claim it is. If anything, he says, it’s making the process even more difficult for marketers to decipher.

And the pending merger of Publicis and Omnicom, he claims, will only exacerbate the situation, concentrating “two-thirds” of the media marketplace in two agency holding companies -- Publicis Omnicom and WPP -- and and an even greater share of the digital marketplace, which he asserts is the, “least transparent sector of the whole media market.”

How can this be? All the players in the landscape -- everyone from exchanges to trading desks -- keep telling me it’s -- finally -- making media-buying an open, transparent book. And based on the free flow of data we’ve started to report on, it certainly seems that way.

Not so, says Manning, asserting that advertisers are actually “shrouded in an increasingly opaque transactional chain” and that, ‘in many instances, advertisers are asked to sign contracts that, if implemented, specifically prevent them from being able to achieve full transparency of the data and money flows in digital media.”

Ah, I get that. But my response would be, then don’t sign those contracts, and don’t enter into those agreements. I mean, who’s holding a gun to your head?

Don’t get me wrong, I’ve heard horror stories. About six months ago, the head of a major DMP (data management platform) walked into my office shaking his head. “What’s wrong,” I asked? Still reeling from his previous meeting with an agency trading desk, he said they showed him data on an audience buy costing the client more than a dollar per user, and when he pointed out that his platform’s data could enable them to buy the same audience for pennies, they replied, “No, you don’t understand, that’s what the budget calls for.”

So if that’s the kind of relationship you have with your vendors, and the kind of specifications you give them, then what would you expect? I have not idea how prevalent those cases are, but I suspect they are more the exception than the rule. But those exceptions have always been around in the media-buying world, even pre-digital. Over the years, I’ve known of plenty of examples of agencies that “time-banked” inventory with broadcast stations, paid them less than they charged their clients, and pocketed the difference. There’s nothing illegal, or even elicit about that (not the U.S. anyway), as long as the clients understand that is their agreement.

So when people make a big deal out of organizations like GroupM and Xaxis being public about arbitraging their clients media trading dollars, I ask, what’s the fuss? They’re actually being transparent about their opacity, and what’s wrong with that? (I even wrote about that when GroupM chief Irwin Gotlieb took some heat for saying as much at the 4As conference earlier this year.)

To me, that is actually a form of transparency. The exact margins -- and all the mark-ups along the way -- may not be evident to a client, but the final cost of doing business, and the method that got them there is 100% apparent. The rest is just a decision about how you want to conduct business.

On the flip-side, I imagine there are situations where client procurement departments are conducting the equivalent of forensic accounting, or maybe even a proctological exam, to get at the essence of every touchpoint and transaction along the way from bid to buy to an ad being served.

And don’t get me wrong, there are plenty of opportunity for margin in the current media trading infrastructure. One reliable source claims to have seen the log file of a buy that had “100” different touchpoints on it, meaning 100 different intermediaries touching it, and presumably marketing it up, before an ad got served. During a recent conversation with another pretty big ad tech player that facilitates such transactions, they told me that would be an extreme situation, but that there normally are dozens of touchpoints per trade, and they all occur within that 100 millisecond bid window.

I get that. But I don’t get Manning’s charge that it is creating more of an opportunity for marketres to be cheated than the old fashioned way. Yes, it happens faster, increasingly by machines, and there is lots and lots of volume of data involved, but so what? The real issue is business rules, agreements, and contracts. And, oh yeah, trust. If you don’t like the deal you have with your marketing services partner, change it. If you don’t trust your marketing services partner, change them. I believe the good ones will thrive, and the bad ones will disappear, but that’s because I believe in open and transparent markets. And in the end, I believe data-based trading will make the marketplace more transparent, not less so. But we may need to give it time.